APEC Looks To Tax Reform To Boost Tourism

by Mary Swire, Tax-News.com, Hong Kong

12 May 2014

The Asia-Pacific Economic Cooperation (APEC) Tourism Working Group has confirmed
that tax reform is needed to ease burdens on tourism and travel companies and
consumers, and thereby support development within the sector in the region.

Progress towards more effective taxation regimes to deepen the sector's contribution
to economic growth in the Asia-Pacific, as demand for international travel increases
within the region, was made in recent discussions between tourism ministry officials
from APEC economies in Cusco.

APEC's 21 member economies welcomed 355m international tourists last year,
propelling an industry that employs about 125m people. It was said that tourism
is expected to provide more than USD650bn to the region's economy in 2016, and
member economies could gain up to 57m additional international tourism arrivals
by that time, based on the adoption of policy changes in areas such as taxation.

"International travel and tourism is on the rise across the Pacific but
there is an opportunity for much greater industry growth," said Magali
Silva Velarde-Alvarez, Peru's Foreign Trade and Tourism Minister. "Lifting
impediments on service providers, including opaque taxation regimes and unnecessary
costs that are ultimately passed on to consumers, is needed to unlock the region's
market potential. APEC economies are now working actively to address this."

"Tax levels and how they are applied, for example, through air passenger
duties, are major determinants of the cost of international travel which greatly
influences demand," explained Javier Guillermo, Lead Shepherd of the APEC
Tourism Working Group. "When a tax regime is improperly structured, it
can result in unprofitable air routes and service reductions, and weigh on the
ability of travel and tourism companies to operate."

APEC economies have therefore launched a new joint project to promote tax reform
within the industry, with the goal of "determining how to achieve more
transparent, fair and equitable tax regimes to reduce barriers to tourism development.
At the same time, a one-size-fits-all approach is unsuitable given the diversity
of the region's taxation systems and tourism sectors."

The project will draw on business and consumer interviews and surveys, primary
data collection and onsite assessments of issuing authorities in a cross-section
of APEC economies. The findings will be examined by the region's tourism ministers
when they meet in September 2014 in Macau.

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